No Nigerian state can adequately finance its budget without borrowing

Despite an increase in disbursements at the monthly Federation Account Allocation Committee (FAAC) meeting since the beginning of 2018, no state in Nigeria can finance its budget without borrowing, a report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown.

The report which detailed analysis of FAAC disbursement for the third quarter of the year is contained in NEITI’s quarterly review, an analytical review of topical issues designed to ensure transparent and accountable management of revenues from the extractive sector.

The report, made available to PREMIUM TIMES on Monday, showed that there are wide disparities between revenue figures of many of the states across the federation and their budgetary figures.

The review showed that the trend of increasing revenues to the federation witnessed since the beginning of the year continued in the third quarter of 2018 as total FAAC disbursements in Q3 rose to N2.278 trillion.

“The last time total disbursements exceeded this amount was in the second quarter of 2014 (N2.510 trillion),” the report said. “The amount disbursed in the third quarter of 2018 also made it two consecutive quarters in which disbursements have exceeded N2 trillion since the third quarter of 2014. The amount disbursed in the third quarter of 2018 also made it the fourth consecutive quarter in which FAAC disbursements have increased.”

Meanwhile, the report also detailed the difference between hypothetical revenue figures and budgets for the various states of the federation.

“There is virtually none of the states that can adequately finance their budgets from IGR and FAAC disbursements,” the report showed. “The states will have to resort to different levels of borrowing.”

According to the report, the gap between the budgets and revenues is below N50 billion in three states of Enugu, Taraba and Yobe; while the difference between the revenues and budgets is between N50 billion and N100 billion in 14 other states. They include Abia, Anambra, Delta, Edo, Ekiti, Gombe, Jigawa, Kebbi, Kogi, Nasarawa, Niger, Ondo, Plateau, Zamfara.

“However, this difference is above N100 billion in majority of the states (Adamawa, Akwa Ibom, Bauchi, Bayelsa, Benue, Borno, Cross River, Ebonyi, Imo, Kaduna, Kano, Katsina, Kwara, Lagos, Ogun, Osun, Oyo, Rivers, Sokoto).
“Akwa Ibom, Cross River, Lagos and Ogun States present special cases as the difference in these states is above N200 billion.”

NEITI added that although IGR is historically high in Lagos and Ogun States, it is very unlikely that the states’ actual IGR for 2018 will be sufficient to cover the difference between revenue and budgets.

The NEITI publication is one of the organisation’s policy and advocacy tools.